New Delhi, Aug 12 (IANS) India’s industrial production grew at a much slower rate of 7.1 percent in June, as against 11.5 percent in the previous month, due to a dip in manufacturing activity.
Leading industry lobbies, however, voiced no worries and said the drop in production to single digit was due to a high base effect.
‘The fall in industrial production was on expected lines as it largely reflects a higher base in the same period last year,’ said Chandrajit Banerjee, director general of Confederation of Indian Industry (CII).
‘Despite this decline, CII believes it will be possible to achieve 9-9.5 percent average growth in industrial output during 2010-11. This is based on our expectation of a positive investment scenario.’
Though 13 out of 17 industries, which constitute the IIP, posted a positive growth in June, the one with highest weightage, manufacturing, fell to 7.3 percent in the month under review, compared to 8 percent in the period ago, official data released Thursday showed.
The manufacturing sector constitutes about 80 percent of the IIP.
Commenting on the IIP data, FICCI Secretary General Amit Mitra said: ‘The slowdown in Indian manufacturing sector is on the expected lines as we have moved into the territory of high base effect and also due to the gradual phasing-out of monetary and fiscal stimulus.’
Among the top performing sectors was consumer durables, which grew the fastest at 27.4 percent, compared to 16.2 percent in the year-ago period.
Mining expanded at 9.5 percent, a slower rate of growth compared to an increase of 14.2 percent in June 2009.
However, during the April-June quarter, industrial output has risen 11.6 percent, compared to a mere 3.9 percent in the previous corresponding period.
‘The moderate and negative growth in export sectors like textiles, apparel and leather shows weakness in global demand impinging on our manufacturing sector. However, the continued strong growth in sectors like automotive and consumer durables reflects buoyancy in consumer demand which is likely to sustain the growth of manufacturing in coming months’, said Mitra.
Montek Singh Ahluwalia, deputy chairman of the Planning Commission too concurred with the high industrial output forecast and said the index’s growth would remain in high single digit in the current fiscal.
Equities took a slight beating at the Bombay Stock Exchange after the numbers were out, but soon recovered smartly. Analysts said the dip in output had already been factored in Tuesday’s sell off.